1 hr ago
Gold Slips as Hot Inflation Lifts Fed Hike Bets
Gold prices moved a little lower after new US inflation data came in hotter than expected.
The data showed that prices excluding food and energy rose 0.3% in August from July.
This made traders think the Federal Reserve may raise interest rates this week.
Higher interest rates can make gold less attractive because gold does not pay interest.
Traders estimated an 88% chance of a September rate increase.
President Donald Trump has instead urged the Federal Reserve to lower rates.
At the same time, fighting in the Middle East helped push oil prices higher.
Oil prices can add more pressure to inflation.
Some investors still believe gold could rise because it can help protect portfolios during uncertain times.
Gold fell 0.2% to $4,339.96 an ounce in Singapore after hotter US inflation increased expectations of a Federal Reserve rate hike.
Core consumer prices rose 0.3% in August from the previous month, according to data released Friday.
Traders priced in an approximately 88% chance of a September rate increase, which could pressure non-interest-paying gold.
President Donald Trump again called for lower interest rates, potentially putting him at odds with the Federal Reserve.
Escalating Middle East conflict pushed Brent crude toward $107 a barrel, while talks on a temporary Strait of Hormuz shipping lane were postponed.
- Who
- Gold traders, the Federal Reserve, President Donald Trump, and investors are central to the report.
- What
- Gold edged lower as hotter US inflation strengthened expectations of a Federal Reserve interest-rate hike.
- Where
- The market movement was reported in Singapore, while related shipping discussions concerned the Strait of Hormuz.
- When
- The inflation data was released Friday, with the Federal Reserve meeting scheduled for this week; Trump repeated his position Sunday.
- Why
- Higher inflation increased rate-hike expectations, and higher borrowing costs typically weigh on gold because it pays no interest.
Lower Rates
Higher Rates
Federal Reserve policy
Lower Rates
President Donald Trump has called for lower interest rates and has expressed growing frustration with the Federal Reserve's stance.
Higher Rates
Hotter-than-expected inflation has increased pressure on the Federal Reserve to raise rates at its meeting this week.
Gold outlook
Lower Rates
Many investors continue to expect gold to grind higher because it can serve as a portfolio hedge, particularly amid uncertainty.
Higher Rates
Higher borrowing costs are typically negative for gold because bullion does not pay interest.
Key facts
- Gold price
- Spot gold was down 0.2% at $4,339.96 an ounce at 8:30 a.m. in Singapore.
- Weekly performance
- Gold fell 1.8% for the week and declined for a third week.
- Core inflation
- US core consumer prices increased 0.3% month over month in August.
- Rate-hike probability
- Traders priced in an approximately 88% chance of a September increase.
- Oil price
- Brent crude moved toward $107 a barrel after rising almost 9% the previous week.
- Other metals
- Silver fell 0.8% to $64 an ounce, while platinum and palladium also declined.
- Gold trading range
- Gold has traded near either side of $4,400 since rebounding from about $4,000 in July.
Sources
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